Ask and you shall receive: ERISA's remedies for non-disclosure.

• Author: Thompson, Amy

ERISA provides members of employer-provided benefit plans the right to request and receive essential documents that pertain to their rights under a plan, whether the plan is a retirement fund, a 401(k) fund, or health or disability insurance. Plan administrators who fail to disclose plan documents upon request are in non-compliance, triggering a private federal cause of action for civil penalties. The failure to recognize the protections granted and duties imposed by ERISA under these sections can lead to unnecessary and even catastrophic consequences for individuals as well as fiduciaries involved in ERISA litigation. This article will highlight the significance of ERISA's procedure for requesting documents and the cause of action this creates for non-compliance by providing an overview of how the federal circuits apply the provisions when awarding statutory penalties and granting other relief. Additionally, this article will argue that ERISA's provision for "other relief" should be considered restitutionary and utilized more broadly by the circuits, as modeled by the Eighth Circuit in Brown v. Aventis.

1. INTRODUCTION

   Under the Employee Retirement Income Security Act ("ERISA"), (1) participants and beneficiaries of employer-provided benefit plans (2) have a protected fight in 29 U.S.C. section 1024(b)(4) to receive documents that govern the terms of provided plans. (3) Often these requests are in response to a denial of benefits, (4) a failure to provide pension or retirement funds, (5) or an ERISA lien. (6) If a plan administrator fails to comply with a request for information within thirty days, the participant or beneficiary is provided a private cause of action to enforce the duty in federal court. (7) Plan administrators who fail to disclose requested documents mandated by ERISA may be personally liable for fines and other penalties under 29 U.S.C. section 1132(c)(1)(B). (8)

   Because section 1132(c)(1)(B) has been characterized as a basely punitive provision designed to punish non-compliance, (9) plan administrators should be on notice of acts that give rise to statutory penalties. (10) The court has discretion to impose penalties of up to $110.00 a day, (11) as well as "such other relief as it deems proper" for a plan administrator's failure or refusal to disclose documents. (12) As noted by the United States Supreme Court, (13) "[f]aced with the possibility of $100 a day in penalties under [section] 1132(c)(1)(B), a rational plan administrator or fiduciary would likely opt to provide a claimant with the information requested ... especially when the reasonable costs of producing the information can be recovered." (14)

   At the same time, when called on to enforce these penalty statutes, courts tend to construe the provisioned language narrowly. (15) For this reason, participants and beneficiaries making requests must take care to adhere to the statutory requirements embodied under section 1024(b)(4) because requests addressed to a person or entity not indicated by statute may be insufficient to trigger the protections granted under ERISA. (16)

   Initially, this article will discuss the legislative history behind ERISA, often the backdrop for interpreting disclosure provisions. (17) Next, the statutory request for documents under section 1024(b)(4) will be examined, including an overview of judicial interpretations of mandated elements. (18) Then, this article will explore the federal cause of action granted under section 1132(c)(1)(B) by reviewing aspects of the statute encountered in litigation. (19) Finally, this article will argue for a broader judicial interpretation of the remedies provided under section 1132(c)(1)(B) by analyzing the Eighth Circuit's restitutionary award for non-disclosure in Brown v. Aventis. (20)

2. BACKGROUND

   1. ERISA'S LEGISLATIVE HISTORY AND CONGRESSIONAL INTENT

      ERISA was enacted in 1974 to protect employee benefit plans for the well-being of employees and their beneficiaries. (21) The uniform federal system was designed to balance the interests of the employer with those of the plan participants. (22) Congress struck this balance by providing tax incentives and limited liability to employers (23) while at the same time placing stringent fiduciary obligations upon them. (24)

      Before ERISA, Congressional investigations revealed that many employer-provided pension and welfare plans were mismanaged or abused, resulting in losses that affected employees and their families by the millions. (25) Congress worked to eradicate the private sector's rampant abuse and mismanagement by enacting legislative precursors such as the Welfare and Pension Plans Disclosure Act ("WPPDA"). (26) WPPDA regulation was based upon the principle of disclosure, viewed as the strongest deterrent against private sector abuses. (27) Ultimately, the legislation proved ineffective in providing protections intended by Congress. (28) This ineffectiveness stemmed largely from the Act's limited disclosure requirements and inadequate fiduciary standards as applied to employer plan providers. (29)

      In response to this failure, Congress drafted Title I under ERISA to mandate rigorous reporting requirements, "particularized" to the extent that an individual "knows exactly where he stands with respect to the plan." (30) The reporting scheme was designed to ensure that each participant understood "what benefits he may be entitled to, what circumstances may preclude him from obtaining benefits, what procedures he must follow to obtain benefits, and ... persons to whom the management and investment of his plan funds have been entrusted." (31) Such detailed reporting was intended to empower a more informed workforce to better consider pertinent employment and financial options. (32) Furthermore, by prescribing "stringent rules of conduct," ERISA would serve the paternalistic role originally intended under WPPDA. (33)

      This sweeping mandate for disclosure also functioned to discourage malfeasance by holding the private sector to a higher fiduciary standard. (34) Expansive disclosure would create the transparency necessary to ensure fiduciary responsibility. (35) "[I]f fiduciaries are aware that ... their dealings will be open to inspection, and that individual participants and beneficiaries will be armed with enough information to enforce their own rights as well as the obligations owed by the fiduciary to the plan in general," it was believed that the safeguarding effect provided under ERISA's fiduciary section would function efficiently. (36) It is to this end that Congress equipped individuals, as well as the federal government, with powerful measures to compel compliance. (37)

      Expanding enforcement powers to individuals gave bite to ERISA's bark. (38) Specially furnished with "broad remedies for redressing or preventing violations of the Act," participants and beneficiaries were granted "the full range of legal and equitable remedies" in both federal and state courts. (39) Ultimately, in making both legal and equitable remedies available to individuals, ERISA effectuated Congress's intent to remove obstacles that had hampered enforcement of fiduciary responsibilities and recovery of benefits. (40)

      Among ERISA's enforcement provisions is a multi-faceted section granting individuals a private cause of action for disclosure violations. (41) To activate the powerful remedies available however, participants and beneficiaries must first meet the requirements under section 1024(b)(4) by submitting a proper request for documents. (42)

   2. REQUESTING DOCUMENTS UNDER 29 U.S.C. SECTION 1024(B)(4)

      The statutory provision of section 1024(b)(4) is found within the reporting and disclosure duties mandated under Title I of ERISA. (43) This section imposes a duty upon plan administrators to provide specific documents to participants or beneficiaries upon written request. (44) Namely, the provision serves as a mechanism designed to grant individuals the right to documents at any time in order to determine where they stand in relation to a plan and to ensure that their benefits are properly administered. (45)

      This basic right can only be triggered if the participant or beneficiary makes a proper request pursuant to the statute. (46) To determine whether a proper request for documents has been made, the courts have adopted a variety of statutory interpretations regarding section 1024(b)(4). (47) These interpretations offer guidance for accurately assessing the proper requesting party, (48) the proper recipient of a request, (49) the acceptable form of a request, (50) and the documents mandated for disclosure. (51)

      1. The Proper Requesting Party: The Participant or Beneficiary

         Specifically, section 1024(b)(4) provides that a plan administrator "shall, upon written request of any participant or beneficiary," provide certain documents relating to the plan. (52) To make a proper request under this section then, one must be either a participant or a beneficiary. (53) Under ERISA, a "participant" is:

         any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit. (54) Additionally, a "beneficiary" is a "person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." (55)

         The Supreme Court has provided some clarity to these statutory concepts. (56) In Firestone, (57) the Court examined the meaning of "participant" within the context of standing to bring a claim under section 1024(b)(4). (58) The Court held that the term "participant," under section 1002(7), referred to "all employees in covered employment and former employees with a colorable claim to vested benefits." (59) The decision assists...